The Natural Gas Price Watch Thread

[hardtootell]

Anyone want to speculate (or calculate) when Canada will become a net importer?

And, for Canada to become a net importer, it would need some neighboring country to be a next exporter. I can't see that happening. Unless North America goes big time into LNG imports. Sky high prices then.

From my reading and calculations, I predict that Canada will become a net importer w/in 5 yrs. There is one LNG port in New Brunswick that I know of. The rest would come through US LNG ports after being exported from Russia, Iraq, Iran or Qatar. I doubt that there is presently enough capacity at the ports to supply the projected shortfall. So- Canadians I hope you will sleep well knowing that your very survival depends on nations with pretty spotty histories of fair play when it comes to trade. Wake the F%%K up!

I invite fact backed discussion and challenges to my assumptions.

Sounds like a good argument for construction of the Alaska gas pipeline to Calgary, as well as for accelerated development of the conventional reserve in the Mackenzie Delta, and accelerated research on development of gas hydrates in the same area. There are also significant shale gas reserves in the Horn River Basin.

I imagine that all of these projects are uneconomic at current prices, but they are probably cheaper and more secure than imported LNG. It would be prudent to begin preliminary work, if they can find a way to fund it.

Yes- I have heard of all these possibilities.
This paper describes the Horn Delta:

http://www.woodmacresearch.com/content/ ... dasgas.pdf

and while it does say that 18-31 tcf could be extractable, it won't breakeven below $US 6.5/mcf. Which is about $2 above our present price...

If the Mckenzie delta project is any indication, it will never happen or be delayed until we have severe shortages. Again I ask- what is the energy rate of return? How much NG is available best case? I assume it will be more sour than the conventional gas we are using up. Matt Simmons (not known for his optimism) has said there may not be enough alloying elements left to handle this gas in it's corrosive natural state.
If David Hughes (Geoloigst w Natural resources Canada) is lurking out there somewhere- please step up.

[Maddog78]

5 years is too soon to become a net importer.
US imports of Can. gas will fall due to the lack of demand in the current recession.
All it will take is a bump back up in price to slow the trend.


US DOE stats on Canada gas

Outlook

Canada has continued to produce natural gas faster than it replenishes its reserves. Canada’s production/reserves ratio (the number of years of proven reserves remaining at existing production levels) has declined from 35 years in 1985 to 9 years in 2006. Along with falling production, demand for natural gas is expected to rise, driven by the oil sands industry and the power sector. According to Ziff Energy Group, natural gas demand by the oil sands industry could rise from 1 Bcf/d in 2007 to 2.8 Bcf/d in 2015. The combination of falling production and rising domestic consumption could impact Canadian natural gas exports to the United States: according to Ziff Energy Group, Canadian natural gas exports to the U.S. could fall to 5 Bcf/d by 2015, versus 9.9 Bcf/d in 2007.

[hardtootell]

5 years is too soon to become a net importer.
US imports of Can. gas will fall due to the lack of demand in the current recession.
All it will take is a bump back up in price to slow the trend.


US DOE stats on Canada gas

Outlook

Canada has continued to produce natural gas faster than it replenishes its reserves. Canada’s production/reserves ratio (the number of years of proven reserves remaining at existing production levels) has declined from 35 years in 1985 to 9 years in 2006. Along with falling production, demand for natural gas is expected to rise, driven by the oil sands industry and the power sector. According to Ziff Energy Group, natural gas demand by the oil sands industry could rise from 1 Bcf/d in 2007 to 2.8 Bcf/d in 2015. The combination of falling production and rising domestic consumption could impact Canadian natural gas exports to the United States: according to Ziff Energy Group, Canadian natural gas exports to the U.S. could fall to 5 Bcf/d by 2015, versus 9.9 Bcf/d in 2007.

Thats 9 yrs to zero in 2006. Six yrs to zero in 2009. So, I am guessing imports w/in 5 yrs!

[Maddog78]

Industrial demand for gas is way down.
Oil sands demand is likely down too but I'm not certain on that.
For sure all the projects that have been cancelled won't be using any gas for a while.
With the potential for bringing on new production in the next 5 yrs. I still think that is too early for imports.
Not saying they won't happen eventually but not in 5 yrs.

[hardtootell]

Industrial demand for gas is way down.
Oil sands demand is likely down too but I'm not certain on that.
For sure all the projects that have been cancelled won't be using any gas for a while.
With the potential for bringing on new production in the next 5 yrs. I still think that is too early for imports.
Not saying they won't happen eventually but not in 5 yrs.

As much as I hate to be confrontational Is this just wishful thinking or do you have data?

Why not w/in 5 yrs? Do you have other data? If so, let it see the light!

[jamest]

It strikes me that determining the remaining gas reserves in Canada is very uncertain and is highly price dependent.

The first thing that strikes me is that the citation of a remaining reserve life of 9 years refers to proved reserves (I assume this is conventional reserves only). I would want to know a lot more about the definition of proved, as well as an assessment of probable and possible conventional reserves, before drawing a conclusion.

Another thing that caught my eye in the reference cited by Maddog78 was the statement that the volume of coalbed methane in place (not recoverable) in Alberta alone could be 500 TCF. I found another reference that estimated recoverable reserves in Alberta to be 170 TCF, and in BC to be another 90 TCF.
http://en.wikipedia.org/wiki/Coalbed_methane

When you add this to estimated shale gas reserves in the Horn River Basin of about 20 TCF to 50 TCF (as best I could tell from a brief search), you're looking at some big volumes.

And this doesn't consider the potential for gas hydrates.

It simply comes down to price.

If it were up to me, I'd be pushing very hard right now to assess the magnitude of these resources and to determine the investment and lead time needed to get them on stream.

[Blacksmith]

Do you have other data? If so, let it see the light!

With the exception of Esso (Exxon) all future projects have been scaled back or cancelled. Since existing bitumen and oil sands operations must continue to operate (prehaps at a reduced level ) because of prohibitive costs of shuting down and then starting up again. Natural gas demands by bitumen and oil sands operators will remain steady at around 2007 levels.

[Maddog78]

Industrial demand for gas is way down.
Oil sands demand is likely down too but I'm not certain on that.
For sure all the projects that have been cancelled won't be using any gas for a while.
With the potential for bringing on new production in the next 5 yrs. I still think that is too early for imports.
Not saying they won't happen eventually but not in 5 yrs.

As much as I hate to be confrontational Is this just wishful thinking or do you have data?

Why not w/in 5 yrs? Do you have other data? If so, let it see the light!

It's right there in the link I already posted.

Canadian natural gas exports to the U.S. could fall to 5 Bcf/d by 2015, versus 9.9 Bcf/d in 2007.

That is a long way from importing gas in 2014 and those figures are based on higher economic activity than the US has and will have for the next couple of years.
If the gas price jumps back up to $6 or better from the current $4.50 you will see plenty from those other reserves mentioned in the post above come on stream.

[Blacksmith]

And this doesn't consider the potential for gas hydrates.

It simply comes down to price.

If it were up to me, I'd be pushing very hard right now to assess the magnitude of these resources and to determine the investment and lead time needed to get them on stream.

The Geological Survey of Canada has done reserve estimations in the past and may I ask what good they did other than provide data for political speeches.

Production of gas hydrates are generations removed from coal bed methane.

I worked on reserve estimates in the 1970's and after nearly a year of careful deliberation our reserves were arbitrarily doubled by Silly Servant Administrators.

[dohboi]

yeahhhhh.

Before I go into any tirades, perhaps I should ask exactly what you folks mean by gas hydrates in this context.

[Tanada]

yeahhhhh.

Before I go into any tirades, perhaps I should ask exactly what you folks mean by gas hydrates in this context.

Given that gas hydrates in this context has to mean methane hydrates and there are only one kind of methane hydrates because that is the description for a chemical, not just some made up name. It means just exactly what you expect it to mean, methane trapped in water cage ice under certain pressure and temperature conditions.

Face it, unless the government strictly enforces a no harvesting protocol for Methane Hydrates and backs it up with jailtime of extreme magnitude people are going to keep tryign to harvest the Methane from them. The potential resouce is so huge it is hard to even imagine. Of course if the PETM burp theory is correct then harfesting might be the worst possible thing we could do.

LINK

[Blacksmith]

Paleocene-Eocene Thermal Maximum (PETM) did not occur during the Late Pleistocene Eemian Stage when average temperatures were estimated to be 5 degree C higher than they are today.

I would be much more concerned over melting of the permafrost.

[hardtootell]

It strikes me that determining the remaining gas reserves in Canada is very uncertain and is highly price dependent.

And this doesn't consider the potential for gas hydrates.

It simply comes down to price.
.

I think you may be oversimplifying the critical factor here.

The critical factor to getting NG to us (before it becomes moot)- may be time or materials or economics or some other thing.

One thing that cannot be denied is that all extractable fossil fuels must be delivered in a refined state that allows more energy content than went into delivering them. Otherwise, there is no point in doing it. You can't burn >100 cf of gas to get 100 cf of gas. At least not for long.

I would bet that as the existing developed reserves are used up, the energy rate of return drops for each successive development (on average). One day it will be at parity.

[Tanada]

Paleocene-Eocene Thermal Maximum (PETM) did not occur during the Late Pleistocene Eemian Stage when average temperatures were estimated to be 5 degree C higher than they are today.

I would be much more concerned over melting of the permafrost.

If you are referring to the penultimate interglacial 135,000 to 115,000 years ago the geological record does show a 4 to 5 C higher temoperature in the Arctic basin at that time.

We also happen to have had a 4 to 5 C high temperature anomoly over the Arctic during the summer twice in the last three years. If that anomoly becomes long term then the Arctic will lose a lot of its ice mass, under those conditions the last time sea level was 6 to 7 meters higher than it is today.

As for the Arctic continental shelf methane hydrates surviving through the Eemen, everyone keeps arguing about how stable they are. If your right we have nothing to worry about in terms of arctic amplification melting them for some time yet, and I hope you are right. On the other hand I have seen it argued that every glaciation acts as a reset mechanism for northern hydrates, they accumulate very slowly but when the world is glaciated they just keep building millenia by millenia until they get released by some mechanism. Current research of the Arctic shelf indicates that some release 15,000 ybp may have been the trigger that began our Holocene interglacial. The problem is if estimates are at all accurate, and you need a LOT more data points to know if they are, then a large scale release does become a concern.

As for the Tundra melt, someone on PO.com pointed out to me I beleive it was early 2008 that during the Holocene Thermal Optimum 8000 ybp a lot of what is tundra today was active growing forest land. That being the case I don't have nearly the concern about Permafrost thawing I used to have, 8000 years ago was not a bad time to live, climactically speaking.

[RdSnt]

As for the Tundra melt, someone on PO.com pointed out to me I beleive it was early 2008 that during the Holocene Thermal Optimum 8000 ybp a lot of what is tundra today was active growing forest land. That being the case I don't have nearly the concern about Permafrost thawing I used to have, 8000 years ago was not a bad time to live, climactically speaking.

This last bit doesn't make sense to me. Are you suggesting that there is no concern because the warmer weather will change the tundra to forest?
That could be true, but the tundra has to thaw first and then it will take thousands of years for the soil to change enough to support any meaningful level of forest cover

[Tanada]

As for the Tundra melt, someone on PO.com pointed out to me I beleive it was early 2008 that during the Holocene Thermal Optimum 8000 ybp a lot of what is tundra today was active growing forest land. That being the case I don't have nearly the concern about Permafrost thawing I used to have, 8000 years ago was not a bad time to live, climactically speaking.

This last bit doesn't make sense to me. Are you suggesting that there is no concern because the warmer weather will change the tundra to forest?
That could be true, but the tundra has to thaw first and then it will take thousands of years for the soil to change enough to support any meaningful level of forest cover

Yes it has to thaw first, but it doesn't take more than a decade for thawed tundra to support a rich variety of grassy plants, and it doesn't take more than 50 years for a well watered grassy region to convert to forest land. Albeit it takes 200 years for a forest to become mature, it doesn't take nearly that long for it to start growing. Where in the workld did you get the idea that it takes thousands of years?

For example, when the ice sheet left Michigan this area was under water, early Lake Eire was larger than the modern one. Even so the water drained away around 8200 ybp leaving a swampy mucky mess. By 8000 ybp this whole are was densely forested.

This region is not unique, anywhere with high enough temperature and sufficient water Forests colonize very quickly. The first trees in are species like Cleavland Pear, the birds eat the berries as they migrate and drop the seeds pre fertilized as they fly over. They spread so easily that some foresters want them reclassified as invasive, but in a healthy forest they have to compete for space like any other plant. I don't know where you are but here in the Great Lakes you can drive along any stretch of highway with power lines on the sides and see the rows of Arborvitae and other trees that grow there because birds perch on the wires and drop fertilized seeds while they do so, which tends to concentrate the effect. They drop many more while flying but the effect is broadcast, if you know what I mean.

[misterno]

Another aspect to include in the near term shortages are the enormous draw-downs that occur in Alberta to supply tar sands extraction.
While future expansions of tar sands production are being delayed or canceled, current production is not flexible. It must be maintained at current levels.
Yet, gas reserves in the area are running out fast with little prospect for increases.

If Canadian NG production stops, how on earth will they heat the tar sands to extract oil from it?

LNG importing comes to mind

[Blacksmith]

If Canadian NG production stops, how on earth will they heat the tar sands to extract oil from it?

LNG importing comes to mind

Oil has particular property call flammability.

[RdSnt]

Another aspect to include in the near term shortages are the enormous draw-downs that occur in Alberta to supply tar sands extraction.
While future expansions of tar sands production are being delayed or canceled, current production is not flexible. It must be maintained at current levels.
Yet, gas reserves in the area are running out fast with little prospect for increases.

If Canadian NG production stops, how on earth will they heat the tar sands to extract oil from it?

LNG importing comes to mind

Very good question. For starters LNG is a non-starter because it couldn't be supplied in large enough quantities, and then there is the matter of where the LNG would come from.

There are all sorts of nuclear suggestions. Traditional plants that generate steam and electricity. A serious one is to insert giant induction heating probes and heating the tar for years at a time.
There are even proposals to set of nuclear bombs underground and harvesting the oil that drains to the bottom of the blast area.

None of which solves the feedstock problem

[RdSnt]

If Canadian NG production stops, how on earth will they heat the tar sands to extract oil from it?

LNG importing comes to mind

Oil has particular property call flammability.

It's not oil, it is bitumen tar. Doesn't burn worth a damn.